Condensation is the killer of mufflers. They get hot when working then draw in moisture when cooling down. When a car or bike is first started and until it warms up you'll see white smoke - that's actually steam coming from the mufflers from the trapped water.
So it is really common to get rusty flakes out of a muffler. If the muffler is solid, don't worry about it.
As for the cracks, a lot of them do that. I've got a set of stainless that have a crack about half that long. Weld it up with chrome rod and keep using them.